Regulators vs Facebook – the Tally of Fines will be Mounting

Facebook’s quarterly financial results reveal that it expects to be fined between $3-5 billion for its privacy violations. However, any fine to be imposed has to be seen in the context of Facebook’s $56 billion annual revenue.

Facebook’s Q1 2019 results contain the following note:  “In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices, which accrual is included in accrued expenses and other current liabilities on our condensed consolidated balance sheet. We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

The Federal Trade Commission (FTC) has not publicly commented whether it will impose a fine or not. There are currently more than 26,000 complaints against Facebook pending before the FTC.

The FTC probe is not the only one Facebook is facing.  Facebook faces many other legal challenges with privacy regulators in the EU.   Ireland’s Data Protection Commission opened a statutory investigation into Facebook following the company’s admission that it had discovered hundreds of millions of user passwords stored in plain text format on its internal servers. The passwords relate to users of Facebook, Facebook Lite and Instagram.

Privacy Commissioner of Canada, Daniel Therrien, and the Information and Privacy Commissioner for British Columbia, Michael McEvoy, issued a statement saying that Facebook has committed serious of Canadian privacy laws, for example third-party app’s unauthorised access to the information of millions of Facebook users. Some of that information was subsequently used for political purposes. The Commissioners call for stronger sanctioning powers, including the ability to issue meaningful fines.

In Germany, the Data Protection Authority of Bavaria has recently ruled that matching customers’ email addresses with their Facebook accounts requires their explicit consent.  The UK’s Information Commissioner’s Office has fined Facebook Pounds Sterling 500,000, which Facebook is appealing against.

The tally will be mounting, but Facebook and investors seem not to be concerned.  After the announcement Facebook’s stock rose 10%.

Source:  Facebook Q1 2019 Earnings Report – Press Reports